Friday, November 18, 2011

TSH Resources advances on solid 3Q earnings

KUALA LUMPUR (Nov 18): TSH RESOURCES BHD [] shares rose on Friday, Nov 18 after the company's third quarter net profit surged 89% to RM34.47 million from RM18.24 million a year ago, underpinned the performance of its palm and bio-integration segment.

At 9.10am, TSH rose 11 sen to RM3.71 with 98,900 shares done.

Its revenue for the quarter rose 27.5% to RM273.15 million from RM214.26 million in 2010. Earnings per share rose to 8.41 sen from 4.45 sen in 2010, while net assets per share was RM2.06.

For the nine months ended Sept 30, TSH's net profit jumped 131% to RM94.39 million from RM40.83 million in 2010 while revenue increased by 29.2% to RM855.69 million from RM662.22 million in 2010.

MIDF Research maintained its Buy rating on the stock and raised its target price by 27% to RM4.50 (from RM3.54 previously) and said the company's 9MFY11 earnings exceeded expectations, accounting for more than 80% of the full year forecasts.

'Owing to higher-than expected earnings in 3QFY11, we have revised upwards our FY11 and FY12 earnings forecast by 10.3% and 26.6% respectively on the back of better margin expectations as more tress coming into maturity.

'In-line with the upward earnings revision, we are revising our target price by 27% to RM4.50. The target price is based on a multiple of 11.6xEPS12, which is one standard deviation below its 5-year historical PER of 14times. We view TSH as currently undervalued as it is trading at only 9.3 times forward PER, which is at the lower bound of its five year average PER band of 7.3 times ' 14.9 times,' it said in a note Nov 18.


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